Paulo Fonseca is set to reject the chance to become West Ham's new manager by signing a new deal at Shakhtar Donetsk, sources close to the Portuguese have told ESPN FC.

Fonseca's snub is a blow to West Ham who are now looking at other options, including Newcastle United boss Rafa Benitez and former Manchester City manager Manuel Pellegrini.

West Ham are on the search for a new manager after deciding not to extend David Moyes' short-term contract which expired at the end of the season. Fonseca emerged as one of the Hammers' top targets and flew into London to hold talks with club officials on Monday.

However, Shakhtar are keen to keep hold of Fonseca and have held positive talks with him about extending his stay in the Ukraine over the last few days.

The 45-year-old has a big reputation after success in Portugal with Pacos de Ferreira before leading Shakhtar to the domestic Treble in his first season in Ukraine after replacing club legend Mircea Lucescu.

He also guided Shakhtar to the round of 16 in this year's Champions League before losing to Roma and they have won the domestic Double this season.